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AR/VR market slump continues with 44.6% drop in Q2 2023

27 Sep 2023 | Rasmus Larsen |

The AR/VR headset market declined for the fourth quarter in a row with headset sales in 2023 expected to be on 2017 levels, but IDC expects the market to grow significantly in 2024.

The market grew during the covid-19 period but has contracted considerably since, explained by the economic downturn, a price hike on the Meta Quest 2, and the small pool of suppliers offering aging hardware.

- "Worldwide augmented reality and virtual reality (AR/VR) headset shipments declined for the fourth quarter in a row as volumes fell 44.6% year over year during the second quarter of 2023 (2Q23)," said market research firm IDC. "Downward pressure from the global economy has curbed demand while the negative impact of a price hike on the popular Quest 2 headset combined with aging hardware from multiple vendors to further hobble growth in this market."

Meta is the market leader

Meta (Facebook) remains the market leader but Sony is making significant gains after the launch of PlayStation VR 2 for PlayStation 5. In the second quarter of 2023, Meta held a 50.2% market share while Sony held a 27.1% share. ByteDance followed in third with a 9.6% share. Rounding out the top-5 were Xreal (formerly Nreal) and DPVR. Standalone headsets have taken over while smartphone-based viewer headsets such as Samsung's Gear VR have almost entirely disappeared from the market.

AR VR market

Growth in 2024, fueled by Apple

2023 volumes are expected to hit 8.5 million headsets, down 3.2% from 2022, and roughly on par with 2017. Next year, however, is expected to look a lot better. IDC forecasts the market to rebound in 2024 with 46.8% growth over 2023, fueled by the launch of Apple's Vision Pro and new hardware from Meta and ByteDance. Also read: Apple Vision Pro features a home cinema mode, revives 3D movies - "The ARVR market is at a critical point in its short history," said Ramon T. Llamas, research director for Mobile Devices and AR/VR at IDC. "Apple's entry next year will bring much needed attention to a small market, but it will also force other companies to compete in different ways. For some, it means meeting Apple head-to-head with similar features and applications. For others, it means guarding their specific market segments. In some cases, it will be both. Still, this will provide users with greater choice and comparison, and eventually the definition for best-of-breed will take on new meaning going forward." IDC expects annual sales to reach 30.3 million units globally by 2027, of which 20 million will be standalone headsets and 10.3 million tethered headsets.

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